Fred Sinowatz, who has died aged 79, had a turbulent time as Austria's chancellor, the head of its government. His tenure was cut short in 1986 when he failed to prevent the election of Kurt Waldheim, formerly an officer in Hitler's army, to the post of federal president. While the reputation of his nemesis never recovered from charges that he lied about his past, Sinowatz is remembered as the last of the folksy, honest and truly authentic politicians who shaped Austria's postwar era.

Born in a working-class family in Neufeld an der Leitha, a small town near the Hungarian border, Sinowatz studied history at Vienna University and rose through the ranks of the socialist Social Democratic party. In 1971, the chancellor Bruno Kreisky appointed him minister for education and culture. He held the post for 12 years as Kreisky won an absolute majority in parliament in three consecutive elections.

Sinowatz opened the school system for children from economically disadvantaged backgrounds by introducing free school books and free trips on public transport for students. He encouraged progressive artists to challenge Austria's conservative culture.

Overweight and clumsy, Sinowatz was not the modern telegenic politician, but his popularity made him indispensable for Kreisky. As other rivals declined, Sinowatz was made vice-chancellor, deputy party leader and chancellor when Kreisky stepped down in 1983, on losing his absolute majority.

Sinowatz had no hunger for power and took the top job more out of loyalty than ambition. His tenure was troubled from the start. Kreisky's shadow hung over him and made him appear weak in comparison. His junior coalition partner, the small Freedom party, was torn between its liberal and nationalist wings. The country was shaken by a growing financial crisis concerning the vast state shareholdings in industry, a dispute over a power plant and several scandals including arms sales to Iran and the revelation that Austrian wine was tainted with anti-freeze. He was widely ridiculed for admitting in a parliamentary speech that "everything is very complicated".

Sinowatz's main political challenge was the 1986 presidential elections, for which the opposition People's party nominated Waldheim, a respected former foreign minister and UN secretary general. Though the presidency has little power, the Social Democrats felt determined to keep the position they had held for decades.

During the campaign, press reports emerged tying Waldheim to the Nazis and war crimes in the Balkans, where he had served as a junior intelligence officer. Sinowatz, whose hand-picked candidate was lagging in the polls, piled on these revelations and attacked Waldheim as dishonest. Plenty of observers suspected that socialist party operators actually fed foreign media and Jewish organisations with damaging documents about Waldheim. For weeks, Waldheim and Austria as a whole were subject to an international storm of indignation.

The effort backfired as voters rallied behind the candidate. A day after Waldheim won a landslide victory, Sinowatz resigned in favour of his smooth finance minister Franz Vranitzky, who soon thereafter ended the coalition when the rightwing maverick Jörg Haider took control of the Freedom party. Vranitzky governed the country for another 10 years in coalition with the People's party; he struggled to avoid international isolation in the wake of Waldheim's election victory and led the country into the EU.

Sinowatz withdrew from politics, but had to face unresolved issues from his chancellorship in two trials. He was acquitted on charges of tolerating illegal weapon exports, but convicted of perjury in 1991 for denying in court that he had talked about "Waldheim's brown past" before the presidential campaign even started.

Sinowatz hardly appeared in public in his last years. But his reputation improved. By the time he died, the battles of his tenure were forgotten and the country came together in mourning a humble, honest and wise man.

His wife predeceased him in 1995. He is survived by a son and a daughter.

· Fred Sinowatz, politician, born February 5 1929; died August 11 2008